barrier option


A type of exotic option that provides a payoff if the value of the underlying reaches or does not reach a predetermined price or "barrier level". Barrier options are characterized as "knock in" if the right to exercise the option is met, or "knock out" if the right is not met. It is characterized as "up" if the price of the underlying is above the barrier, and as "down" if it the price is below the barrier.
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down-and-out barrier option up-and-out barrier option